Service Charge Disputes

Service Charge disputes are one of the main causes of landlord and tenant disputes – but landlords are obliged by law to present the Service Charge under the terms of the lease and also make available to leaseholders the accounts which comprise the annual services charge.

Leaseholders should also be given notice of any extraordinary repairs and maintenance charges, including repairs carried out as an emergency.

Extraordinary repairs may also be paid for under insurances – which leaseholders pay for. Therefore any additional charges for “emergency repairs” or “extraordinary repairs” must be accounted for under the Service Charge, with accounts available to show what these involved and how much they cost.

The service charge should reflect the true costs of expenditure on a property – with tenants paying a percentage under the lease.

However, in some cases, tenants feel that their landlord and its agents are profiting by the Service Charge by overcharging for maintenance, services or administration.

The sort of disputes that may arise over a Service Charge include:

• Failure to attach a full breakdown of costs with a Service Charge invoice
• Failure to notify tenants of when and where they can inspect accounts
• Hefty administration fees (eg managing agents’ fees)
• Unexplained maintenance charges
• Unscheduled service charge invoices (eg “balancing” Service Charge invoices without notice, or with no explanation for this).

If a Service Charge is not served correctly within the law, then tenants may not be legally obliged to pay it – especially if no breakdown in costs has been attached and the relevant accounts have not been made available for inspection.

Tenants usually only have a short time in which to dispute a Service Charge – and taking legal advice from a specialist housing solicitor can help resolve disputes without having to refer the matter to the First-tier Tribunal (Property Chamber – Residential Property).

This has replaced the Land Valuation Tribunal (LVT), which used to deal with Service Charge disputes. Tenants should remember, however, that if a case is referred to the Tribunal, legal costs might be even higher if a landlord appoints its own solicitor and the tenant is required to pay costs.

LAWTEC Solicitors advises both landlords and tenants on service charge disputes – including representing clients at the First-tier Tribunal.

LAWTEC Solicitors can also advise on alternatives to litigation or the First-Tier Tribunal in Service Charge disputes, including mediation and dispute resolution.

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